Real estate investors are abuzz with excitement generated by the lucrative opportunities offered by foreclosure investing. With the possibility of buying cheap repo homes and enjoying as much as 60 percent off their current market values, it is not surprising why distressed property sales has been rising steadily.

For those who are looking into maximizing the profit potential offered by these repo houses, the most popular option available is to flip them. Flipping involves buying a property, renovating it and then selling it for a profit. Considering the huge savings you get to enjoy with foreclosed homes, you are sure to enjoy a hefty return on your initial capital outlay.

In order to ensure your success in the flipping foreclosure business, simply follow this simple guide:

Step 1: Locate the Right Repo Property

One of the most important factors in choosing the right foreclosure is location. Be sure to buy from a neighborhood which is showing signs of recovery and growing demand for affordable homes. Obviously, you will need to do some research and utilize an efficient search tool like foreclosure lists to save on time. Again, inspect the property, inside and outside and even check out the local community.

Step 2: Crunch the Numbers

It is important that you make the right calculations for this will dictate how much profit you get to take home. Make sure you make realistic computations and be sure to stick to your budget. For the repair cost, you can come up with an accurate estimate if you have the property inspected before closing the deal so that you know what you will be dealing with. You might need to talk to a contractor as well to discuss the possible cost of improving the home's appeal.

Step 3: Make A Reasonable Offer

When you have found the perfect property and have the budget for it, make sure your offer is reasonable. This means you can justify the amount you are willing to pay by supporting it with documents such as Broker Price Opinion and a Comparative Market Analysis. It would also help if you have a detailed inspection report so the seller can see how much you will still be shelling out for the renovation/rehabilitation of the property.

Step 4: Remodel According to Function

Once you are the proud owner of the repo home, it is now time for the renovation. At this point, it can be exciting since you certainly would want to fix up the property in such a way that everyone who sees it will want to buy it. But you have to keep in mind you are working with a budget and you need to stick with it. Stay focused on your objective and make sure the rehabilitation is functional with just a bit ofaesthetics.

Step 5: Make the Decision to Sell or Rent

Your primary objective, of course, is to sell the property for a profit. But there are also instances when you might want to consider renting it out before eventually selling it, which is plausible in a housing market which is still in recovery. Weigh the pros and cons of each option and as always, base your decision on figures and facts.